{"id":613646,"date":"2024-01-18T00:00:00","date_gmt":"2024-01-18T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2024\/01\/18\/traders-wager-that-an-upcoming-devaluation-will-be-smaller-than-expected\/"},"modified":"2024-01-18T00:00:00","modified_gmt":"2024-01-18T00:00:00","slug":"traders-wager-that-an-upcoming-devaluation-will-be-smaller-than-expected","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2024\/01\/18\/traders-wager-that-an-upcoming-devaluation-will-be-smaller-than-expected\/","title":{"rendered":"Traders wager that an upcoming devaluation will be smaller than expected"},"content":{"rendered":"

Good morning folks<\/strong>, welcome to the last day of the work week here in the region and to day four Davos for those attending.<\/p>\n

For you today, <\/strong>we have news of market speculation that the devaluation \u2014 supposedly just around the corner \u2014 could be smaller than we expect and happen much later on than we first thought. We\u2019ve also got the low-down on Alshaya Group\u2019s decision to reduce its operations in the country on the back of economic challengesand so much more \u2014 so let\u2019s jump right into it.<\/p>\n

<\/a> And in case you missed it, we welcomed a new publication to the Enterprise family this<\/strong> week \u2014 EnterpriseAM UAE. <\/strong>Think of it as the UAE analogue to your morning read in Egypt \u2014 your essential report on business, finance, the economy, and regulation in one of the world\u2019s most vibrant and exciting economies. You can sign up to have the newsletter delivered fresh to your inbox here<\/a>.<\/p>\n

** You can also stay tuned for the launch later this month of EnterpriseAM KSA. <\/strong>Tap or click<\/a>here<\/a> if you\u2019d like to be added to our list for launch day.<\/p>\n

<\/a> <\/p>\n

THE BIG STORY HERE AT HOME- <\/p>\n

<\/a> Traders\u2019 wager of a big devaluation around the corner begins to dissipate: <\/strong>While everyone is agreed that a devaluation is on its way, traders appear to be convinced that it\u2019s going to be smaller than expected and further down the line than we first thought, Bloomberg<\/a> reports. <\/p>\n

The why: <\/strong>The EGP has been regaining value in the three-month non-deliverable forwards (NDF) market, suggesting traders are pulling back from wagers of a severe devaluation in the short term after IMF officials indicated<\/a> that a full float of the EGP may not be in the cards for the immediate future, saying that the Fund is prioritizing getting inflation under control over exchange-rate reform. Three-month NDFs had the USD-EGP rate below 40 yesterday, from a record high of 45 at the end of December, according to the outlet. <\/p>\n

But some aren\u2019t convinced: <\/strong>\u201cA potential upsizing of the IMF loan will likely be accompanied by an FX adjustment sooner rather than later amid additional pressures on the balance of payments due to the Gaza conflict,\u201d Morgan Stanley economist Hande Kucuk said in a note cited by Bloomberg. <\/p>\n

WATCH THIS SPACE- <\/p>\n

#1- EFG Holding mulling swapping its PayTabs Egypt stake for a slice of its Saudi<\/strong> parent company<\/strong>: <\/strong>EFG Finance \u2014 the non-bank financial services arm of EFG Holding \u2014 might look into acquiring a stake in Saudi\u2019s PayTabs, EFG Finance CEO Aladdin El Afifi told Asharq Business<\/a>. EFG Finance would consider the option of giving up its 50% stake in PayTabs Egypt<\/a> \u2014 a joint venture between EFG Holding and PayTabs \u2014 for a minority stake in the Saudi parent company, El Afifi said. EFG Finance \u201cwould like to have a seat at the table\u201d to help accelerate cross-border expansions, he added.<\/p>\n

<\/a>#2- Egypt looks to hedge against rising commodity prices:<\/strong> The government isconsidering purchasing hedging contracts to guard against expected volatility in the price of certain commodities following disruption in the Red Sea that has upended global supply chains, Assistant Supply Minister Ibrahim Ashmawy told CNBC Arabia<\/a> in an interview yesterday. <\/p>\n

HAPPENING TODAY- <\/p>\n

A high-stakes game against Ghana:<\/strong> The Pharaohs face a tense Afcon clash against Ghana today at 10:00pm CLT<\/a> after a not-so promising start to the tournament that saw the team nearly losing 2-1 to Mozambique until a last-gasp penalty from Mohamed Salah. A poor showing could put Egypt\u2019s tournament fate in jeopardy as it risks getting kicked out at the group stages.<\/p>\n

FROM DAVOS- <\/p>\n

<\/a> It\u2019s Davos day four: <\/strong>It\u2019s a quieter day at Davos after yesterday\u2019s headline speechesfrom US State Secretary Anthony Blinken and UN Secretary-General Antonio Guterres with sessions delving into the AI boom, green transitions, and the global startup scene, in addition to appearances from regional heavyweights you should tune into.<\/p>\n

Rania Al Mashat will be taking the stage twice today<\/strong>: The international cooperation minister will kick off the day by speaking ata session on Building Equitable Transitions: Green and Fair<\/a> at 11:15am CLT. Later on, Al Mashat is penciled in to take to the stage alongside Saudi Planning Minister Faisal Al Ibrahim<\/strong>, Moroccan Finance Minister Nadia Fettah Alaoui<\/strong>, Hikma Pharma Chairman Mazen Darwazeh<\/strong>, Dubai Future Foundation CEO Khalfan Belhoul<\/strong>, DAMAC Chairman Hussain Sajwani<\/strong>, and others for a session on MENA's Economic Dilemma: Reforming amid Uncertainty<\/a> at 2:15pm CLT. <\/p>\n

ALSO- MNT Halan CEO Mounir Nakhla <\/strong>is in Davos as part of the WEF\u2019s Innovator Forum and will speak today on a panel on financial inclusion<\/a> moderated by the Queen of the Netherlands. <\/p>\n

** You can watch the live session <\/strong>here<\/a><\/strong> and check out the full program <\/strong>here<\/a><\/strong>.<\/strong><\/p>\n

ON THE SIDELINES- <\/strong>Al Fanar\u2019s<\/a><\/strong> investments in Egypt could reach USD 1.5 bn this year <\/strong>asthe Saudi company expects its Egyptian operations to \u201ctake up a larger space in 2024,\u201d company VP Sabah Almutlaq told Asharq Business at Davos (watch, runtime: 0:57<\/a>). Al Fanar is a regional and global powerhouse in the construction of renewable energy systems and made the headlines in the local business press after ink<\/a>ing<\/a> an MoU to build a USD 3.5 bn<\/a> green hydrogen and ammonia facility. Al Fanar has also supported our solar ambitions and runs a 50-MW section of the Benban Solar Park.<\/p>\n

\n

THE BIG STORY ABROAD-<\/p>\n

It\u2019s a busy morning in business news<\/strong>, with three stories capturing the attention of journalists around the world. <\/p>\n

#1- Stocks and bonds retreated yesterday around the world. <\/strong>Investors are digesting signs that the United States, the European Union, and the UK will not move quickly to slash interest rates. European Central Bank Christine Lagarde set off the selldown as she joined peers around the world in signaling that rates are unlikely to start coming down until summertime, rather than this spring. <\/p>\n

Bankers speaking in Davos are singing from the same hymnal on that front<\/strong>, writes Bloomberg, noting, \u201cEveryone from JPMorgan\u2019s Daniel Pinto to Standard Chartered\u2019s Bill Winters to Cantor Fitzgerald\u2019s Howard Lutnick have said they expect monetary policy to ease slower than anticipated by the market.\u201d<\/p>\n

The result: The S&P 500, Nasdaq Composite, EuroStoxx 600 and FTSE 100 all fell <\/strong>yesterday<\/strong>, and Asian markets are mixed this morning. Futures suggest mixed openings for major European benchmarks later this morning and a weak open on Wall Street. Notably, Chinese shares are touching a five-year low. (Financial Times<\/a> | CNBC<\/a> | Bloomberg<\/a>)<\/p>\n

#2- Iran is opening fire on its neighbors, claiming to fight \u201canti-Iran terror groups\u201d:<\/strong> Iran has fired missiles and launched drones against targets in Syria, Iraq, and Pakistan in the span of 24 hours, openly claiming responsibility for the operations. It says the missile attacks underscore that it will be \u201ctough and decisive\u201d with its foes, the New York Times<\/a> reports.<\/p>\n

In other regional tensions: <\/strong>The US listed the Houthis as a terror group<\/a> on the same day that they hit another US-operated ship. <\/p>\n

#3- Samsung\u2019s new Galaxy S24 lineup looks set to be a hit <\/strong>thanks to heavy integration of generative AI tech and modest tweaks to its popular designs. The launch of the new handsets is all over the front pages of the global business press, but gadget nerds will want to start with the Verge\u2019s hands-on with the flagship S24 Ultra<\/a>. (FT<\/a> | CNBC<\/a> | Reuters<\/a>) <\/p>\n

ALSO-<\/strong><\/p>\n